UK inflation rose to 2.9% in the year to July, up from 2.6% in June, driven largely by a jump in household gas prices after the energy regulator raised the price cap. The rise matches City economists' forecasts but marks a reversal from previous months, and comes as the inflationary effects of rising global energy prices – linked to the US-Iran war – spread from petrol pumps to household bills, posing a fresh challenge for the Bank of England as it weighs future interest rate decisions.

Housing and household services, along with furniture, drove the increase, while transport made the largest offsetting downward contribution. Gas prices alone rose 14.7% in July, compared with a 7.2% fall a year earlier, following Ofgem's decision to raise standard variable tariffs. The core inflation rate, which excludes volatile items such as energy and food, held steady at 2.6%, against expectations of a dip to 2.5%. JPMorgan's Scott Gardner warned the rebound was a "warning shot", noting petrol prices had already risen 6.3% in August and cautioning that rising business input costs could feed through to consumer goods prices in the months ahead.